The Associated Press reported that Jerome Powell may enter this week's Federal Reserve meeting in a favorable position, with inflation nearing the Fed's targeted rate and unemployment at a nearly 50-year low.
The Federal Reserve's chairman, Jerome Powell, warned that interest rates could increase even further as inflation continues to remain high.
This has been generating some positivity as many had previously predicted. As interest rates continued to rise at a quick pace to combat high inflation many predicted a recession with many layoffs and rising unemployment. But luckily these predictions have not come to fruition. This has led to a new set of questions one of the biggest questions revolves around whether these new developments can be maintained.
Former Federal economist and current chief global economist at Citi, Nathan Sheets, shared this very thought stating "It almost feels like what we saw in the second half of last year was too good to be true. Sheets went on to say that,"When things are too good to be true, you want to try to scratch the surface and say, how durable is this?" As previously stated many officials share Sheet's concerns and are exercising caution before making their next decision. During their last meeting in December, the 19 policy members who had worked on interest-rate decisions had expected to cut their benchmark rates three times this year. Yet the overall timing of those cuts remains unknown.
What's The Next Step?
However, once again, many officials are hesitant to make decisions until they ascertain whether inflation has genuinely been subdued, before considering rate reductions.
Christopher Waller who's described as an influential member of the Feds governing board stated, "Inflation of 2% is our goal. But that goal cannot be achieved for just a moment in time. It must be sustained." The report also states that average checks are increasing by 4 to 4.5% annually however, apartment rental prices are still quickly increasing, and while experts believe rent prices will cool in the wake of new apartment buildings being completed that has not been seen in official data. Not to mention other prices are increasing as well such as the price for meals in restaurants according to the report.
Bill English, a professor of finance at the Yale school of Management and former Fed economist stated, "They run the risk of overstaying their welcome at high rates and slowing the economy down in a way that really isn't necessary." It was also recently reported from HNGN that discussed that the US economy has grown by 3.3% showing signs of resilience.
